According to orders by Federal Court Justice Jonathan Beach on Wednesday, ANZ and ASIC will reach agreement on a penalty to propose to the court at a one-day hearing in September.

ANZ declined a request by Lawyerly for comment.

The Australian Securities and Investments Commission claims in its action filed last May, that between May 2016 and November 2018, ANZ overstated the balances of 165,000 customers. When these customers withdrew or transferred money from their accounts based on the erroneous balance, they were allegedly slapped with cash advance fees and interest. Some customers were hit with thousands of dollars in fees, the regulator said.

While ANZ remediated over $10 million to customers who were affected up until November 17, 2018, the problem continued, ASIC claimed, and another 50,000 customers were affected.

The case sought declarations and pecuniary penalties, as well as orders that required ANZ to implement a system change to ensure balances reflected the total of only cleared funds.

“This alleged misconduct is the result of system errors within ANZ and a lack of effort to comprehensively fix these issues. We say that ANZ has been aware of the unlawful charging since at least 2018 and the problem is still occurring,” ASIC deputy chair Sarah Court said in announcing the case.

Lawyerly contacted ANZ for comment on Thursday.

Contracts authorised ‘commonplace’ cash advance fees, ANZ said

In its defence in August, ANZ denied it overstated the balance amount in customers’ credit cards accounts, and said its customers should have known that the transactions would attract a fee.

The bank denied customers suffered any adverse consequences as a result of the alleged contraventions and said the bank “only charged fees in accordance with the credit contract”.

ANZ said customers were “expressly on notice that cash advances on credit card accounts attracted a fee” through the terms of their credit contracts, as well as letters of offer from the bank, which authorised ANZ to debit any fee or charge applicable to the credit card account.

The bank argued customers were warned that fees might apply when they made such transactions through the “key ANZ channels” – internet banking, the ANZ app, and ANZ ATMs.

Warnings included “Fee alert – A cash advance fee may be charged for this transaction” on the ANZ app, and various warnings under the title “Beware the cash advance on your credit card” on the ANZ website from at least June 2019.

ANZ said letters of offer sent to customers included information on how the fees would be calculated, which was generally on a percentage basis that varied according to the credit amount in the account. If the account was in credit, the credit amount would reduce the amount on which the fee was calculated, the bank said.

ANZ argued the fees, which it maintains it was entitled to charge, were charged in a context where charging fees for cash advances was “the commonplace practice across Australia’s major banks”.

Cash advance transactions constituted only 1.5 per cent of total transaction on consumer credit cards from June 2016 to September 2021, and 1.3 per cent from October 2021 to July 2022, the bank said.

ANZ denied it represented to customers that they would not incur a fee when obtaining a cash advance.

“ANZ denies that, in these circumstances, ANZ represented that the “real time” deposit displayed in the balance amount could be used by the customer to make a cash advance transaction without incurring a cash advance fee,” the bank said in its concise statement.

The bank also denied ASIC’s allegations that it failed to do all things necessary to ensure the credit activities authorised by its Australian Credit Licence were engaged in efficiently, honestly and fairly, in violation of the National Consumer Credit Protection Act 2009.

ANZ argued that in addition to its appropriate response to the concerns raised about the fees, the bank took the “additional and appropriate steps to clarify and confirm when cash advance fees would be charged, and to inform customers about the timing and importance of transaction processing in connection with those fees”.

The bank said its remediation program, completed in December 2021, “was commensurate with the scope and complexity of the program and did not involve inappropriate delay”.

ANZ remediated 220,761 customers affected up until November 17, 2018 to the tune of $10 million, but ASIC says this was not undertaken in a timely manner.

ANZ is also facing a Phi Finney McDonald-run class action alleging it hit credit card customers with retrospective interest on their accounts.

ASIC is represented by DLA Piper. ANZ is represented by Herbert Smith Freehills.

The case is Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited.

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